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Equity Futures: Short bets added in RIL, stock likely to fall further

Informist, Thursday, Jan 12, 2023


By Vaibhavi


NEW DELHI – Reliance Industries bore the brunt of selling by foreign institutional investors as the stock slipped nearly 5% in three straight sessions. The decline in the stock also prompted investors to turn cautious as they aggressively added short positions in the futures segment.


Open interest in the January futures contract of the stock soared nearly 10% as traders aggressively intensified their short bets in anticipation of more weakness in the coming sessions.


The sharp fall in the stock today also dragged it below its critical support of 2,520-rupees today which led to more selling pressure. As a result, traders were trapped at higher strike price put options. Unwinding of positions were witnessed across in-the-money put options of 2,540-2,700-rupee strike prices as traders do not expect any near term trend reversal in the stock.


Consequently, fresh positions were added across 2,470-2,300-rupee strike price put options which reflects expectations that the stock will plunge to those levels in the near term.


Analysts also sound a similar caution as Ajit Mishra, vice-president – technical research believes the stock may fall further till 2,400 rupees. If the stock fails to sustain above that mark, a further decline towards the next critical support of 2,350 rupees will be on the cards, Mishra added.


Foreseeing more pain in the stock, Mishra also suggests investors to wait for a further correction to take fresh positions. Today, shares of the index heavyweight stock ended 2.2% lower at 2,471.60 rupees.


Just like RIL, short positions were also added in the January futures contract of the Nifty 50 as the index struggled to rebound from levels around 17750 points even though it managed to close above that level today.


This is the third time in the week that the headline index has managed to stage a bounce back from its support zone of 17750-17800 points. Weakness in the recent sessions has also pushed the index into an oversold zone and hence, analysts now anticipate a rebound to make its way.


A softer-than-expected US inflation data for December, which is due later in the day, may act as a positive trigger to bring in a relief rally in the market, analysts said. However, as the Nifty 50 is presently stuck in a consolidation zone, only a break on either side of the range from the 18150–17750 levels will dictate a strong directional move, said Rohan Patil, technical analyst at Samco Securities.


Today, the Nifty 50 ended 0.2% lower at 17858.20 points.


–Nifty 50 Jan closed at 17924.50, down 38.45 points; 66.30-point premium to spot index

–Nifty 50 Feb closed at 17998.00, down 33.20 points; 139.80-point premium to spot index

–Nifty 50 Mar closed at 18066.20, down 37.45 points; 208.00-point premium to spot index


The total turnover in the futures and options segment of the NSE was 394.01 trln rupees, against 202.96 trln rupees on Wednesday. Volumes were higher due to the weekly options expiry today.


The turnover in index options was 391.42 trln rupees compared with 200.17 trln rupees in the previous session. Total premium turnover of index and stock options was 656.05 bln rupees compared with 597.77 bln rupees on Wednesday.


Bajaj Finance, Kotak Mahindra Bank, Bharti Airtel, HDFC Bank, Axis Bank, ICICI Bank, Reliance Industries, Infosys, Adani Enterprises, and State Bank of India were among the most actively traded underlying stocks.  End


Edited by Maheswaran Parameswaran


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Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.


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Source: Cogencis

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